Promising outlook lifts hog pricing

THE outlook for US pork exports looks promising and this has helped bolster prices this week. The Chicago lean pig December futures contract settled on Tuesday 13 October at 43.72 cents/lb, up from 40 cents last week.

US Government officials recently made comments suggesting that the US would give Russia any food aid it wants, raising hopes of substantial pork shipments. The 15% collapse in the US dollar against the yen has also made US pork exports more competitive.

Meanwhile, US domestic demand could receive a boost. The new McDonalds pork sandwich apparently tastes pretty good. Pork producers are hoping to see signs announcing “billions and billions served” for these sandwiches, just like burgers. Unlike beef, pork consumption is on the rise in America. The USDA estimates that per capita consumption rose to 52.0 lbs in 1998 from 48.7 lbs in 1997. It is also expected to increase further to 53.7 lb next year.

The extra consumption will be sorely needed to try and tackle growing US supply. Total US pork production this year has been revised by the USDA to the lower figure of 18.772bn lbs from a previous estimate of 18.822bn lbs, but this is still a 9% increase over last year. Next year, production is expected to grow by another 4% because of expansion of US hog facilities.